Property Tales

Keep looking for a deal. They're out there.

-J.A., 47, corporate executive

J.A. AND HIS wife recently entered the real estate market to get out of a big, burdensome tax bind.

"Last year, we got hit with an incredible tax bill because of the alternative minimum tax. I'm not an expert, and the tax-law change was complicated, but if I understand it correctly, you're no longer allowed to use your state taxes as a deduction on your federal return-or vice versa. Because that particular deduction was eliminated, you essentially had to pay something like double for your total taxes. As a result, a lot of people, myself included, were caught having to pay that much more," explains J.A.

"So, my wife and I, who together make more than $100,000 per year and file jointly, had what is essentially a change in our tax status and, because we didn't own anything-any real estate, to be specific-that gives us deductions, we had to bite the bullet and pay. It cost us $10,000, and that's a lot of money."

The couple was renting a 1000-square-foot one-bedroom, two-bath apartment with a windowless home office on the eighth floor of a 15-story building on John St. in the Financial District for $3000 per month. It was in an old office building that had been converted to residential. They'd lived there for three years and loved it.

"Originally, we'd moved downtown from midtown because we found we could get more space for the same amount of money. But we thoroughly enjoyed our apartment and the neighborhood. There aren't as many restaurants and shops as there are a few blocks uptown, but it still has a lot to offer," says J.A.

"Our apartment was three long blocks from the World Trade Center. We were at home on 9/11 when the towers fell. We heard and felt the second plane crash like it was a huge earthquake right outside our windows," he continues.

"We couldn't stay in our home for a week after the attacks, and shuttled around with relatives and friends. Many of our neighbors never moved back home, but we did. Mostly, they were concerned about air quality-and so were we. But my feeling was, after everything that other people suffered, if all I have to do personally to fight the terrorists is not leave home, then that's a no-brainer-I'm staying. That's it. Plus, it's a good neighborhood. That's the whole point. It's a great place to live."

In fact, when they realized they had to buy an apartment to better their tax situation, J.A. and his wife looked first for available properties in the Financial District.

"We found very few listings, and those we found were well beyond our means," he says. "We figured we could spend $400,000 to $500,000 for a place, but everything we saw advertised for sale in the Financial District cost a million dollars or more. There was no point in even looking at those places because we couldn't afford them."

So, searching online and scanning newspaper ads, they set their sights elsewhere.

"We looked at possible apartments in Gramercy Park and on the Upper West Side. We didn't have anyplace specific in mind," J.A. recalls.

Actually, the apartment they chose was the first one they saw. "We bought on Lexington Ave. and 24th St., near Gramercy Park. Coincidentally, we're on the eighth floor, but of a 20-story building. Our apartment's layout is similar-one bedroom, two baths and an area for use as a second bedroom or home office. It's 950 square feet-everything's a little smaller than our downtown place. But I knew as soon as I saw it, it would work for us," he says.

"That same day we saw a pre-war on 110th St. It was a dump, and more expensive. We realized the first place was probably as good as we could get, and bought it. We're very lucky."

It all worked out well, but they miss the Financial District.

"We'd like to move back someday, if they develop more condos and coops that we might buy," says J.A. "We'd love that." o